Agencyfaqs, a portal targeting advertising, media and marketing professionals has launched a classifieds marketplace called Freelance Exchange. It’s currently in beta, and by the looks of it, they will be asking freelancers to pay to sign up - since they currently have a 60 day free trial period for freelancers, who can host a content portfolio which will include. As per the site, around 1000 portfolios are already up. Agencyfaqs will charge freelancers an annual fee - Rs. 600 for a primary account, Rs. 1200 for a professional account and Rs. 2,400 for a firm account, and will also charge Buyers a nominal membership fee, though that’s not been specified. This is effectively an upgrade of the Business Exchange that Agencyfaqs had, and is a part of the communities segment.

I thought I’d give a little introduction to how online marketplaces work, in the extended text.

Online marketplaces are not new: in 1999 there was an article in the Harvard Business Review by Thomas Malone and Robert Laubacher, titled The Dawn of the Elance Economy, where they argued that online marketplaces will offer freelancers - rather, e-lancers - the opportunities to compete for and collaborate on projects and give larger corporations a run for their money. They forecast the evolution of smaller, more flexible organizations, and even temporary companies of collaborating freelancers.

Over the years, a number of marketplaces have sprung up, primarily focused on outsourcing of coding - E-Lance, Guru, Scriptlance, Rent A Coder, among several others. But interestingly enough, large outsourcing co’s that compete with individual freelancers, have also made their mark. For example, Synapse India has so far earned over $3 million on Elance, and apparently employs over 100 people.

There are multiple ways of monetizing such marketplaces - one is to charge freelancers to upgrade their portfolio; another is to charge to bid for projects, while a third is to charge sellers a transaction fee for the projects they do. Accounting in the transaction fee model is tricky since the money is held by the marketplace while the project is being done, and on completion, is transferred after deducting the fee, to the seller. So it is reflected in the freelance marketplace’s books as revenues. The simplest model is the business classifieds model, where you only charge buyers for posting opportunities.